Why Family Offices Are Buying Public Stocks Again as Succession Gaps Widen
Nearly half of family offices increased public equity allocations in 2026, seeking liquidity and quality.
Family offices have spent the last decade pushing toward private markets—private equity, direct investments, alternative assets that promised superior returns in an era of abundant cheap capital. Citigroup's 2026 Global Family Office Report, released in September and based on surveys of over 350 family offices across 41 countries, shows this pendulum swinging back. Nearly half of the family offices surveyed increased their public equity allocations over the past year, making listed markets the top destination for new capital. Goldman Sachs' 2025 Family Office Investment Insights report similarly found a notable increase in public equity allocations, while private equity allocations—still robust—declined modestly from 2023 to 2025.
This reversal matters because these are among the most sophisticated, largest investors on the planet, and their shift signals changing calculations about where real returns lie and what risk looks like in a higher-rate world. But beneath the asset rotation lies a deeper structural urgency: one-third of family offices anticipate leadership transitions within five years, yet succession planning remains inconsistent and underprepared across the sector. The two trends collide as families reposition assets while struggling to clarify who will manage them.
Market dispersion and public equity opportunity replace the private markets faith
The pivot is not about retreating from private assets wholesale. Private markets still represent a core pillar of the average family office portfolio, according to Citigroup's report, with private equity continuing to attract significant capital and direct investing on the rise. But the appetite for new money in public equities has resurfaced with clarity. Global developed equities emerged as the most favored asset class for future allocations, according to the Citi report. J.P. Morgan's 2026 Family Office Report, surveying 333 family offices from more than 30 countries, found that respondents maintain almost 40 percent in public equities alongside their alternatives.
Underneath this rotation lies a specific market logic rooted in changing valuations and return prospects. Goldman Sachs characterizes the shift as reflecting market dynamics where market dislocations and dispersion created an opportunity set in public equities relative to private equity. The private equity mega-funds and broad-based alternative plays that generated outsized returns during the low-rate era of the last decade now face different conditions. The Citi report attributes the shift to a rebalancing toward liquidity and flexibility. Family offices are grappling with inflation as a leading concern, followed by interest rate developments and financial system stability.
Quality and fundamentals matter more as leverage loses its edge
In an environment where returns are increasingly driven by fundamentals rather than valuation growth, quality becomes paramount. The private equity playbook of the 2010s often relied on financial leverage—borrowing to amplify returns. When equity valuations expanded alongside debt accumulation, returns compounded favorably. That dynamic has reversed. With debt more expensive and equity multiples normalizing, the math no longer works the same way. Family offices searching for real returns have noticed.
The return targets family offices set reveal why they are looking harder at public equities. According to J.P. Morgan's research, one-third of family offices target returns exceeding 11 percent annually—described as a stretch given that no major asset class forecasts returns above 10 percent. Around 55 percent of single-family offices target between 7 and 10 percent. Those targets push families to look for combinations of growth, income, and downside protection rather than placing all bets on illiquid private holdings.
Public equities, with their transparency, daily pricing, and ability to be sold within days, fit that profile. Goldman Sachs notes that family offices have held onto their cash balances, positioned for opportunistic deployment over the next 12 months, and modestly increased allocations to private credit as they diversify income-generating strategies. This multifaceted approach to income and liquidity differs sharply from the private equity heavy hands of a decade ago.
Portfolio performance masks operational crisis around succession
Nearly 90 percent of family offices reported positive portfolio performance year-to-date, according to Citi's report. Yet this positive financial backdrop obscures a structural crisis in how family offices are preparing for the inevitable: transitions in leadership and decision-making authority.
The Citi report found that approximately one-third of respondents anticipate leadership transitions within the next five years. Yet the research surfaced consistent obstacles: unclear succession plans, insufficient readiness among future leaders, and lack of alignment around future vision. This gap between timing and preparation creates real organizational risk. The Citi report emphasizes that succession now requires building governance continuity and decision-making frameworks across generations, not simply identifying a successor.
The numbers reveal the scope of unpreparedness. J.P. Morgan's report identified lack of a succession plan for key decision makers as one of the top risks to continuity, cited by one-third of respondents. A Bank of America Family Office study, cited by Foundation Source, found that 87 percent of family offices have yet to undergo a leadership handover, even though 59 percent expect one within the next decade.
Succession is a governance problem, not a financial one
The succession planning crisis has a specific diagnosis. Citi's report found that succession planning needs to extend beyond identifying a successor to ensure continuity of family values, unity and governance across generations. This reframes succession planning as fundamentally a governance and human problem rather than a purely financial one.
The pattern appears across family office types, though with different intensities. Business-owning families encounter succession pressures distinct from those without operating companies. J.P. Morgan's report noted that 41 percent of business-owning families cited internal family conflict as a top-three risk, nearly double the rate among families that own no operating business. This distinction matters because business ownership creates multiple points of potential conflict: the business strategy, the family governance structure, the wealth held inside the business versus outside it, and the question of which family members have competency or interest in running the enterprise.
Families facing this reality have begun responding by strengthening formal governance structures. Among business-owning families, 66 percent adopted formal bylaws compared to 50 percent of non-business families, according to J.P. Morgan. Written bylaws establish decision-making processes, define roles, clarify what happens in disputes, and create reference points for difficult conversations. The investment in governance structure is essentially an acknowledgment that informal family discussions and assumptions will not survive a transition.
“Approximately one-third of family offices anticipate leadership transitions within five years, yet succession plans remain unclear and next-generation readiness insufficient.”
Next-generation readiness requires more than wealth and intention
The Citi report found that family offices are deploying educational programs, governance participation, advisor engagement, and hands-on learning opportunities to prepare future leaders. But it is not clear how widely these programs have been adopted, leaving open the question of whether enough successors will be ready to manage sometimes billions of dollars across multiple jurisdictions and asset classes.
The younger generation brings different priorities and skills. A Bank of America study cited by Foundation Source notes that among family offices with less-engaged current leaders, 73 percent anticipate their successors will redefine the family office's core purpose; separately, 51 percent of family offices expect philanthropic goals to increase following leadership transitions. This generational shift creates both opportunity and risk: the next generation may bring innovation and engagement that refreshes the family office, but if not properly integrated into current decision-making and governance, that energy can also fragment family unity and strategy.
Technology adoption varies widely among successors. A Bank of America study cited by Foundation Source found that 57 percent of family offices use AI for investment research, 76 percent automate forecasting, and 74 percent use automation for alternative investment analysis. Younger leaders often expect these tools and may push for their integration. Without clear conversations between generations about investment philosophy, risk tolerance, and technology's role, generational transitions can trigger operational disruption alongside leadership change.
Global expansion amplifies succession complexity across borders and jurisdictions
Geography complicates succession further and creates its own urgency. The Citi report found that 38 percent of respondents expect family globalization to increase over the next five years, with assets and family members scattered across multiple jurisdictions. That 38 percent represents a significant expansion of cross-border complexity, not a rounding error.
International families face distinct pressures compared to domestic ones. While U.S. family offices focus primarily on inflation and interest rate risk, international families prioritize geopolitical risks, according to J.P. Morgan's research. That divergence matters because it means the governance structures that work for a New York family with assets in Connecticut differ sharply from structures needed for a family with members in Singapore, assets in London, a business in São Paulo, and real estate holdings in multiple countries.
Cross-border wealth brings tax and regulatory complexity that forces earlier planning and can make succession chaotic without advance preparation. The Citi report emphasized that as families globalize, they require enhanced tax coordination and regulatory compliance.
